Updated with Bank of America's comment.
NEW YORK (TheStreet) -- The Federal Deposit Insurance Corp.'s court filing on Monday objecting to Bank of America's (BAC) $8.5 billion settlement of Countrywide mortgage putback claims, could put the final nail in the coffin for the settlement.
The nation's largest bank arrived at the Countrywide settlement in June with a group of institutional investors that included BlackRock (BLK), MetLife (MET), subsidiaries of Goldman Sachs (GS) ING Groep (ING), and the Federal Home Loan Bank of Atlanta. Bank of New York Mellon (BK) -- the trustee of the affected mortgage-backed-securities trusts -- has asked a New York judge to approve the settlement in November, according to a Bloomberg Report.
|Bank of America CEO Brian Moynihan|
Andrew Gray, the director of the FDIC's Office of Public Affairs, said the agency's court filing was "simply a formal notice to preserve our right to make claims as a part of the settlement and seeks additional information to evaluate those potential claims," and that the filing was "not an evaluation or opinion on the settlement itself."The filing is a "Notice of Intention to Appear of Object," and the agency is objecting to the agreement because it is holding Countrywide mortgage paper "covered by the proposed settlement" inherited from "numerous" failed banks, because it "does not have enough information to evaluate the Settlement." The FDIC joins various other parties objecting to the Countrywide settlement, including six of the 12 Federal Home Loan Banks (according to Bloomberg News), several public pension funds (according to Reuters), and New York State Attorney General Eric Schneiderman. Bank of America spokesman Lawrence Grayson said "we believe that the trustee acted reasonably in entering into the settlement, and that there are compelling reasons why the agreement should receive judicial approval." The FDIC is required under law to recover as much as possible on the problem assets it has retained after selling-off the choicest assets of failed banks, which could cause the agency to take an independent course from the Obama Administration. One indication of this was the Obama Administrations pressure on Schneiderman to agree to a broad settlement of the mortgage foreclosure mess, between federal regulators, the states, and the largest U.S. mortgage servicers, including Bank of America (which acquired Countrywide in 2008), JPMorgan Chase (JPM) (which acquired the failed Washington Mutual from the FDIC in 2008), Wells Fargo (WFC) (which acquired Wachovia in 2008) and Citigroup (C).
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV